The History of Money

China made the world’s first paper money

Almost 700 years before Sweden distributed the first European banknotes in 1661, China issued the first overall circulating currency. Actually, use of paper notes dates back to even earlier, to the Tang Dynasty of the 7th century. Copper coins had been China’s primary currency for centuries. In order to carry huge amounts of money, people hauled around an ever-increasing amount of these coins – not the safest or easiest thing to do over long distances. In order to try and lighten their load, merchants started to deposit these coins with one another and were given paper certificates for the value of the coin. The paper was definitely lighter – so light actually that it is believed to have got the nickname “flying money,” for its propensity to blow away in a strong wind. Usage of paper money stayed in place for the next two centuries, until a copper shortage and inflation from overproduction of the bills forced the Song Dynasty government officials and merchants to accept and issue paper notes backed by gold reserves – the first legal tender on the globe.

The Inca – great empire and no money at all

Unlike the neighbouring Mayas or Aztecs, who utilized goods such as textiles or beans to sell and buy products, there was no concept of money among the Inca. But how did they manage to establish the wealthiest and largest empire in South America? They used a highly regimented system called “Mit’a.” Incan men when required, from the age of 15, to provide physical labour for a set amount of days to the state, sometimes two-thirds of the year. They built palaces and public buildings, and an extensive system of roads, which connected the empire together and enabled its continuous expansion. The government supplied all the basic necessities of life in return; housing, clothing, food, tools, etc. Money never changed hands. Even if there had been money, there were no markets to spend it at. However, they did value the huge piles of silver and gold sitting beneath their land.

Medieval merchants and the credit card

In an age when currency was frequently unavailable, the forerunner of the credit card – the tally stick – became more and more popular in Europe. In this early type of financial record keeping, notches were made on a wooden stick to mark the amount lent and owed. Then the sticks were split down the middle; the debtor kept one half and the creditor kept the other. Once payment was made, the sticks were joined up and the payment marked on the stick. This tally stick system also had another built-in advantage: it was almost impossible to counterfeit, because the grain, size and shape of the wooden halves had to perfectly match up. For over 700 years, tally sticks were used until the system was abandoned in 1826. When the British parliament finally decided to clear the thousands of leftover tally sticks eight years later, they chose to burn them in the underground furnace that heated the House of Lords and resulted in a huge fire that destroyed the majority of the complex – the worst fire in London since the Great Fire of 1666.

Tax payable only in animal fur in Czarist Russia

The arrival of Russian trappers and hunters in the remote wilderness of Siberia in the1600s sparked a “fur rush” that several historians have compared to the California gold rush in its intensity. The Russian first trade became so popular and the pelts so valuable that they were called “soft gold” and welcomed as hard currency across the empire. According to estimates, they accounted for over 10% of Russia’s total revenue. By the 17th century, Russia’s Czarist government imposed a tax on Siberian peasants. Called the “yasak,” it was a yearly tribute, payable only in fur and required of every man over 18 years of age.

Paul Revere and early American Currency

Revere was tasked with designing the engraving plates for the first Continental currency, produced by Massachusetts to fund the war. These early paper notes became worthless by the end of the American Revolution. The first regularly circulating coins in American history were brought in March 1793, consisting of precisely 11,178 one-cent pieces – $111.78 – and made of rolled copper supplied, in part, by Paul Revere.

The first American gold rush took place in North Carolina, not California

In 1799, a gold nugget weighing an estimated 17 pounds was discovered by the 12 year old son of a Cabarrus County farmer named John Reed. When more gold was found in surrounding counties, it sparked the first prospecting boom in American history. By the early 19th century, over 30,000 North Carolinians were mining for gold. The possibility of financial reward was so much that soon to enter the scene were professional mining companies. For over 30 years, all gold used in US coins were mined in North Carolina. However, by the 1860s, the Carolina Gold Boom had ended.

Counterfeiting during the American Civil War

For nearly as long as money itself has existed, money tampering has existed. Coins were shaved around the edges, and the excess precious metals pocketed by the perpetrators. Counterfeiting was a crime punishable by death in Rome as well as in other ancient civilizations. During the American Civil War, it was almost impossible to spot the real money from the fake due to dozens of different notes and coins being issued.